Directors loan end of year Directors loan end of year - Page 3
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  1. #21

    Fingers like lightning

    chopper is NOT a disguised employee


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    Aug 2015
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    Quote Originally Posted by CoderSaturn View Post
    Okay thank you. Essentially I'll be paying the 7.5% dividend fee this way, I thought there would be a different way around it.
    Is the plan to keep the money in the company forever, or is the plan to eventually take the money out and spend it yourself?

    There is no more tax efficient way of taking money out of YourCo than paying the 7.5% dividend tax. Leaving money in YourCo for taking out later simply means you'll almost certainly pay more tax on it. Tax rates for contractors are only heading in one direction at the moment.

    So provided the cash is in your company, you should be taking dividends out right up to the top of the basic rate band.

    And besides, if you're on £500 a day (so, what, £110,000 per year) then the £450 is less than one day's pay. The 7.5% dividend tax on it is £33.75. An actual drop in the ocean. Your client has probably paid you more than £33.75 whilst you sit on coffee breaks during one day. So either you pay YourCo £450, or you pay HMRC £33.75 and keep the balance.

    Or even better, you pay that £450 into a SIPP. Winner winner, chicken dinner.

    But, if you want the company's money to become your money, then you must pay the tax.

  2. #22

    Still gathering requirements...

    FK1 is too good to be a permie


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    Aug 2015
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    Quote Originally Posted by CoderSaturn View Post
    Hi,

    My year end was February and my accountant has finalised my accounts and informed me that the Directors Loan Account has a debit of £450, that must be repaid. This was a bit of a surprise.

    What implications does this have to me and my company, if any? I.e. tax.

    How do I pay the money back to my company?

    Thank you.
    Check why first. Do not trust your accountant. They may decide do not approve some of your expenses on their own belief while another accountant would not see a problem. I had that experience with SJD years ago. 5 years my Starbucks expenses were OK as used for lunches but a new accountant decided that is not and without asking me told me about I have ££600-800? as Director Loan that must be repaid. As he decided so.

    Directors Loan itself over the End of Year is normal thing. Nothing to afraid. Repay it in the meantime with maybe 3% interest and that all.

  3. #23

    Super poster

    TheCyclingProgrammer is NOT a disguised employee


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    Jan 2009
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    Your DL will need to be repaid within 9 months of your year end date to avoid an s455 charge, although on £450 that isn't necessarily the end of the world (it's like a temporary CT charge which you get back the year after you repay it).

    As others have said though, the simplest thing to do would be to declare a dividend (if you have any basic rate band left do it now, or wait until the new tax year) and credit it to the DLA.

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